Time to Audit the Fraser Institute

Time to Audit the Fraser Institute

On March 25, 2012, the Compliance Division of the Canada Revenue Agency (CRA) received a letter from Jensen Shawa Solomon Duguid Hawkes LLP (aka JSS Barristers). In 11 detailed pages, JSS Barristers lodged a complaint against Environmental Defence, a charity registered with the CRA, on behalf of Ezra Levant’s brainchild, the Ethical Oil Institute. A month later, on April 24, the JSS-Ethical Oil team sent the CRA a second, similar letter, this one a 44-page imputation that the David Suzuki Foundation, like Environmental Defence, was “in contravention of the CRA rules surrounding registered charities and political activity.”

According to the CRA, and as echoed in the Ethical Oil Institute’s complaints against Environmental Defence and the Suzuki Foundation, a charity may not be created for a political purpose, and it can't “take part in an illegal activity or a partisan political activity.” Specifically, the CRA states that charitable organizations must devote “substantially all” (i.e. 90%) of their resources to charitable activities, and that any political activity is “subordinate” to its stated purpose.

That's not to say that charities can't promote their work and educate the public about issues that have political implications. But in doing so they must ensure that public awareness campaigns aren't their “primary activity, and their information must be “well-reasoned.” It goes without saying that they don't connect their views to specific political parties or candidates.

As an example, the CRA states that “a purpose such as improving the environment by reducing the sulphur content of gasoline would very likely require changes in government regulations. Generally, any purpose that suggests convincing or needing people to act in a certain way and which is contingent upon a change to law or government policy (e.g., “the abolition of” or “the total suppression of animal experimentation”) is a political purpose.”

Given all of this, and given the Ethical Oil Institute’s obvious concern about registered charities flouting CRA rules — namely, engaging in partisan political activity, or spending too much time and money influencing public opinion about laws, policies, or government decisions — it’s surprising that Ethical Oil didn’t send a third letter complaining about perhaps the most politically partisan of all Canadian charities — the infamous Fraser Institute.

“The problem with political ENGOs with charitable status is that they act like political advocates, and even partisans, but they expect the tax treatment of Mother Teresa,” Levant told the Vancouver Observer recently, adding that EthicalOil.org isn’t a registered charity. “We don't pretend to be in the same moral category as feeding the hungry or housing the homeless — and so we don't get an exemption from the Income Tax Act like registered charities do.”

But the Fraser Institute does. Variously described as “conservative” and “libertarian,” Ethical Oil’s brother in arms works toward “a free and prosperous world where individuals benefit from greater choice, competitive markets, and personal responsibility.”

While such rhetoric sounds great on the surface, there’s much more to it than meets the eye. The Fraser Institute has spent approximately $100 million since its inception in the mid-1970s to sanctify the neo-liberal principles of Frederick Von Hayek and Milton Friedman.

At once maligned (by the political left) and celebrated (by the political right), the Fraser Institute represents a free-market libertarianism popularized by Ronald Reagan and George H.W. Bush, and embraced almost wholly by Alberta’s Progressive Conservatives and the Conservative Party of Canada. Although it vehemently maintains its independence and objectivity, the Institute focuses its research on lower taxes, smaller government, less market “interference” and privatized social services — all of which benefit the corporate sector.

“The Fraser Institute is a small cog in a global wheel of reaction designed to roll back the democratic gains of the 20th century,” says Donald Gutstein, a professor at Simon Fraser University and the author of Not a Conspiracy Theory: How Business Uses Propaganda to Manipulate Us (Key Porter, 2009).

And that makes it inherently a political organization, writes David Climenhaga, an author, teacher, trade union communicator and former journalist with the Globe and Mail and the Calgary Herald.

“The Fraser Institute strives to change Canadians' political attitudes so they will place far-right political parties like Prime Minister Stephen Harper's Conservatives in power, and keep them there. It works relentlessly to restructure our political architecture in ways that will make it difficult for citizens to seize back their own country. And it fields an army of ‘former researchers — Danielle Smith, leader of the far-right Wildrose Party here in Alberta is a prominent example — who play an overtly political role.”

As Climenhaga notes, its annual report reads like a who’s who of former conservative politicians, prominent businessmen, and pro-free market academics. Not surprisingly, the energy sector is well represented. Gwyn Morgan, former president and CEO of EnCana, is a long-serving supporter and member of the board of trustees. So are Steve Snyder, president and CEO of Transalta; W. W. Siebens, president and CEO of Candor Investments Ltd. and a Petro-Canada director since 1986, and John Hagg, former chairman and CEO of Northstar Energy Corporation and principal of Tristone Capital Inc — to name but a few.

Senior fellows have included prolific Calgary Herald op-ed contributor Barry Cooper and the University of Calgary's Tom Flanagan, Stephen Harper’s former chief advisor and a key part of the Wildrose Party’s recent ascendance. Academic and former Alberta MLA Ted Morton was also a Fraser Institute fellow before he took office (and may end up back there given his loss in the recent Alberta election). Preston Manning was there, too, as was King Ralph Klein himself.

Even Ezra Levant, the political right’s unapologetic mouthpiece, cut his teeth with the Fraser Institute, writing Youthquake (a treatise arguing for smaller government, including privatization of the Canada Pension Plan) while a student intern in 1995.

But what of its purported political activity? Does the work of the Fraser Institute, a registered charity, contravene the Income Tax Act or CRA policy?

A few examples will suffice to make a case at least as compelling as Ethical Oil’s attack on Environmental Defence and the Suzuki Foundation.

First, it would seem that the Fraser Institute explicitly communicates to the public calls for laws and policies to be changed. The Fraser Institute’s recent report, Follow Indiana’s Lead: Canadian Provinces Should Give Workers Choice[PDF], urged Canadians to adopt “right-to-work” laws typical of those U.S. states south of the Mason-Dixon Line.

Earlier this May, the Fraser Institute’s Mark Milke wrote (apparently without irony) that “Canada’s cartel-like supply management boards should be abolished,” because “they cement an undesirable nexus between politics and money,” among other reasons.

What of Bill C-323, which would allow people anywhere in the world to use the Canadian courts to hear civil cases against, say, Canadian mining companies who violate international laws or treaties to which Canada is party? The Fraser Institute says bury it, because this “reckless” bill would leave Canadian firms vulnerable to huge risks and costs (if they are found to have violated the law).

There's also the little matter of offering “well-reasoned” positions, which the CRA defines as “factual information that is methodically, objectively, fully, and fairly analyzed.” To cite just one example, the Fraser Institute's research on environmental issues appears to leave much to be desired. For instance, the Fraser Institute's annual Environmental Indicators report analyzes environmental trends, routinely concluding that “contrary to public opinion, in most instances objectives for protecting human health and the environment are being met, pollution and wastes are being controlled, and resources and land are being sustainably and effectively managed.”

Hilda McKenzie and William Rees (an award-winning ecologist at the University of British Columbia) were suspicious of such claims, so they vetted the 1997, 1998, 2002 and 2004 editions of Environmental Indicators. In “Analysis of a Brownlash Report,” a 2007 paper in the journal Ecological Economics, McKenzie and Rees concluded the reports were fraught with errors, including “a narrow scope,” and “various problematic omissions” and “distortions,” which allowed the authors to draw overly optimistic conclusions and report recommendations that fit the Institute's small government, less regulation philosophy.

Lauded in the mainstream press for presenting “good news” about the environment, and for bucking the trend of “finding environmental gloom under every rock,” such disingenuous “brownlash” analyses provide the public with incomplete or downright erroneous information, hindering, rather than helping, citizens and policymakers make sound, long-term decisions about how to balance economic activity and environmental protection.

Does the Fraser Institute deserve an audit? I’m no lawyer, but if JSS Barristers feel there’s a strong enough case to be made for an audit of Environmental Defence and the Suzuki Foundation, then the evidence seems to indicate similar treatment for the Fraser Institute.

Given the Harper government’s handling of the F-35 stealth fighter fiasco, and its relentless attack on environmental groups, a little transparency would go a long way. So why not throw the Fraser Institute on the CRA Black List too?

Ed. note: We're excited to welcome Jeff to the DeSmog team. He'll be a regular contributor going forward. For more information about the Fraser Institute, read Jeff's attached article “Mind Games” [PDF] from the March 2009 edition of Alberta Views magazine.

Previous Comments

Recently I discussed the funding of the Fraser Institute (and compared it to Pembina). I uncovered $1M of hitherto unreported contributions from Encana, and gave the most up-to-date picture of Fraser’s funding from oil and gas interests.

http://deepclimate.org/2012/05/17/fraser-vs-pembina-part-2-funding/

“Previously unreported cumulative funding from Encana stands at about $1 million; founding CEO Gwyn Morgan gave an additional $1 million, for a total of $2 million. Other important donors have included the Koch brothers ($523,000) and Exxon-Mobil ($120,000), along with significant but unreported regular donations by an unidentified Canadian Koch subsidiary and Exxon-Mobil subsidiary Imperial Oil. There is also circumstantial evidence pointing to support by Keystone XL proponent TransCanada and oil sands operator Canadian Natural Resources. “

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Democracy is utterly dependent upon an electorate that is accurately informed. In promoting climate change denial (and often denying their responsibility for doing so) industry has done more than endanger the environment. It has undermined democracy.

There is a vast difference between putting forth a point of view, honestly held, and intentionally sowing the seeds of confusion. Free speech does not include the right to deceive. Deception is not a point of view. And the right to disagree does not include a right to intentionally subvert the public awareness.

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A report released today by the University of Victoria’s Environmental Law Centre calls for sweeping reform of Canadian charitable law in line with other jurisdictions such as the U.S., Australia, New Zealand and England.

Current rules around “political activity” — defined by the Canada Revenue Agency (CRA) as any activity that seeks to change, oppose or retain laws or policies — are confusing and create an “intolerable state of uncertainty,” the report says.